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Europe, New World and China itself compete for coveted Chinese palate
2013-05-16
By Anthony Rose

PREDICTING wine trends in a country as vast and diverse as China is a bit like trying to juggle with several crystal balls at the same time. Even if you only end up holding just one, you are still peering into a future clouded with uncertainty.

Luckily there is a more reliable indicator of the future when it comes to wine. Past performance combined with current trends can give a more reliable insight into which wines are most likely to be drunk in China in the foreseeable future.

Chinese wine consumption soared by 142.1 percent between 2007 to 2011, reaching a total of 159.25 million cases, or 1.91 billion bottles. China, along with Russia, is also the fastest-growing market for wine imports.

By 2016, China is set to become the world's second-biggest wine consumer after the United States, overtaking both France and the UK to reach 252 million cases of wine. This is according to research carried out by Vinexpo in collaboration with The International Wine and Spirits Research.

Three billion bottles are a lot of wine, although at still only two bottles per head of population, it has a long way to go compared with France's 71 bottles. So if China's newfound thirst for wine is insatiable, which wines will China be drinking? Two decades ago in the UK, French wine, Bordeaux in particular, was top dog.

The New World was no bigger than a bump on a log and the idea that Australia might overtake France on our tables was just not on the agenda. But the unthinkable happened. Today, Australia has overtaken France, and the United States, Chile, Argentina, South Africa and New Zealand are all well represented on UK wine retailer shelves.

Today, France represents nearly half of all imported wine in China and some 30 Bordeaux properties too are now owned by Chinese businesses. Yet if we look at current trends in China beyond France, it seems likely that China will mirror what has occurred in the West as consumers become more appreciative of wine values.

The growth of wine education in China, along with wine competitions, food and wine matching, foreign travel and the wealth of information disseminated on Sina weibo (China's version of Twitter) and in the traditional media, are all powerful tools for creating an appreciation of wine's true worth and not merely the social cachet that has been so important for French wine.

Imported wines are set to grow 65 percent over the next five years with the New World playing an increasingly prominent role. Figures from China Customs show Chile, Argentina and New Zealand posted higher growth rates than the annual growth of 10 percent achieved by France.

While the overall rate of growth of imported wines has slowed down to 10 percent against 65 percent in 2010/2011, the New World's share is likely to continue to increase as part of a trend away from purchasing decisions based on status and luxury towards decisions based on quality and value.

The growth of wines outside France is not only about the New World however. Both Spain and Portugal increased growth at a higher rate than France up to August 2012 and Europe's generic bodies are also active, witness for instance Germany holding "Riesling weeks" this month in Shanghai, Beijing, Qingdao (Shandong Province), Changsha (Hunan Province) as well as Shenzhen and Guangzhou (both in Guangdong Province).

At Prowein in March, the big European wine fair that takes place every year in Düsseldorf, Germany, Christian Witte, estate director of Schloss Johannisberg, surprised me by saying that the famous Rheingau winery's biggest market outside Germany is China. Neither red nor French, but German and white, much of it is drunk in the southeast of China, where dry and off-dry Rieslings are beginning to be appreciated as a good match for fresh fish and seafood.

The joker in the pack of rising wine consumption in China is the performance of China's own expanding wine industry. While roughly five in every six bottles of wine drunk in China today are Chinese-made, imports are making such inroads that the sales of domestic producers have been badly affected. Chinese companies are not taking it lying down.

Only in April, China Foods Ltd, the Hong Kong-listed unit of COFCO (China National Cereals, Oils and Foodstuffs Corporation), whose net profit slumped 41 percent, announced it is to buy wineries in Australia and the US as part of a move to compete with foreign wine suppliers, while its Chinese arm, the state-owned conglomerate COFCO, runs its own wine-club chain, Chateau Junding, as a showcase for its products.

At the same time, as premium wine regions such as Ningxia Hui Autonomous Region expand rapidly, China's consumers can expect to see the quality of Chinese wine improve.

According to Vinexpo's Robert Beynat, "the quality of Chinese wine is constantly improving and soon this will become a problem for the French, as they were the first into China but are facing increasing competition from both homegrown wines and wines from other countries keen to break into the Chinese market."

All of which raises the fascinating prospect of a three- way contest between Europe, the New World and China itself for the hearts and palates of the Chinese consumer.

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